cgt on buy to let

[nomura]

Hi,

I have been living in my main residence for 3years and I have decided to rent out it ( buy to let) and buy a new property as main residence.

I took a repayment mortgage on the buy to let.
The property value was 425k when I started the buy to let.
After 5 years the value of the property is still the same , 425k but the repayment mortgage repaid some capital , 90k .My mortgage was 320k but after 5 years the value is 230k ( =320k-90K).
I have decided to pay back all the mortgage left ( 230K ) and sell the property at the same price 425k.

Do I need to pay any CGT?

Thanks a lot
Nomura

[Ian Wright]

Your CGT is based on the difference between what you paid for the property and what you sell it for.

When you live in a property you are entitled to principal private residene relief (PPR) which stops you from paying CGT when you make a profit on sale. As part of the PPR rules, the last 36 months of ownership are treated as though you are still living there. So if you moved out 2 years ago and sell now, you should be covered by the 36 month rule.

If there is other gaps in your residence at the property that you have not mentioned you may be entitled to another relief which is an extension of PPR rules called lettings relief. Other relief suchs as indexation and taper relief are also avaialable.

Ian
ianw@butler-co.co.uk

[nomura]

thanks a lot

[AndyLevett]

Don't forget that if you move back into the property for a reasonable length of time before selling it then you will also get an additional PPR relief of up to 3 years for the period you were not resident.

[Ian Wright]

I believe the last 36 months (3 years) was mentioned in my previous post. Please lets us not confuse people. You can only get one 36 month period.

[AndyLevett]

You are correct Ian, as Nomura will have an alternative owned property as main residence during the period away from this property. My apologies.

Otherwise TCGA92/S223 (3) (a) allows for periods of absence from a property for any puropse to be covered by PPR not exceeding 3 years.

This would only have been relevant had the home while away from the let property not been self-owned.

[nss27@cam.ac.uk]

Ian and Andy, you did confuse me a bit. If one moves out of a PPR after 5 years and rents it for 3, then moves back for a year, can one rent for another 3 after that and keep the affair CGT free?